If you are like millions of taxpayers who work in the service industry, you may receive tips. The tax code is clear; if you receive tips you must report them as income. Some employers have systems to make this easy, while others do not. Here are some suggestions:
Proper tip reporting has three components.
1. Keeping a daily tip record
2. Reporting your tips to your employer
3. Recording your tips on your income tax return
Recording tip activity
Per the IRS, you can keep your tips by either maintaining a tip diary or by saving documents that show your tips. If your employer does not provide you with an electronic form of a tip diary, you can always create your own. The IRS has [Read more…] about Tips on tip reporting